Cross-border acquisitions and family businesses

Abstract

Purpose The purpose of this paper is to shed light on the propensity of family firms to join a cross-border acquisition as acquirers. Design/methodology/approach The present study analyzes a sample of 270 acquisitions in the period 2015–2017 whose acquiring firms are represented by family and nonfamily listed European firms. Findings The results point out that family firms are less likely to make a cross-border acquisition than nonfamily counterparts. Research limitations/implications Mergers and acquisitions (M&A) activity is cyclical by nature, represented by waves of concentrated intensity rather than necessarily by constant activity over time. Therefore, the main limitation is represented by the period analyzed (2015–2017), which restricts the possibility of seizing a greater number of transactions. Practical implications If careful evaluation leads to the consideration of M&A as the optimal mode of entry into a certain foreign market, family firms should broaden the pool from which managers are selected in order to access more qualified staff, who are able to face international M&As. Originality/value In recent years, a growing body of literature has focused on the effects of family ownership on the propensity of making an M&A, on the method of payment chosen by an acquired family firm, and on the reaction of the market at the announcement of a family business’ M&A. However, despite of the relevance of the entry modes of firms’ internationalization strategies, scant attention has been devoted to cross-border M&As conducted by family firms, which occur when a family firm acquires a firm located in a foreign country. In order to fill the research gap, this work investigates the likelihood of a family firm’s acquisition of a foreign target.